Keppel DC REIT's property in Tampines, Singapore, known as Keppel DC Singapore 2 (Photo: REITsWeek)Keppel DC REIT's property in Tampines, Singapore, known as Keppel DC Singapore 2 (Photo: REITsWeek)

Keppel DC REIT has entered into a share purchase agreement with Keppel Data Centres Holding to acquire a 90% interest in a five-storey data centre property in Singapore for approximately SGD202.5 million (USD145 million).

The fully occupied asset, which is known as Keppel DC Singapore 3, is located adjacent to Keppel DC REIT’s current property, Keppel DC Singapore 2, in Tampines.

“The proposed acquisition of Keppel DC Singapore 3, a prime asset with a strategic location and built to high specifications, is a positive step in strengthening Keppel DC REIT’s foothold in the Singapore data centre market”, said Chua Hsien Yang, CEO of the REIT’s manager.

“The Singapore market has shown strong momentum in recent years, and remains one of the key data centre hubs in Asia”, he added.

The proposed acquisition will be funded with net proceeds of approximately SGD275.3 million, that will be raised via a preferential offering of 242 million new units in the REIT at an issue price of SGD1.155.

The new units will be offered on the basis of 274 for every 1,000 existing units in Keppel DC REIT held as at 5.00 p.m. on 25 October 2016.

Citigroup Global Markets Singapore, DBS Bank, and UBS AG have been appointed as joint lead managers and underwriters for the preferential offering.

According to Keppel DC REIT, the issue price represents a discount of approximately 5% to the volume weighted average price per on 17 October, being the last full market day prior to the announcement of the preferential offering.

Upon induction, the REIT’s portfolio will increase from SGD1.14 billion to SGD1.35 billion, comprising 11 data centres globally.

Keppel DC REIT’s aggregate leverage is also expected to reduce from approximately 36.1% to 27.7%, upon successful execution of the preferential offering exercise.

“The proposed acquisition will also improve the portfolio’s lease profile such that not more than 17% of the enlarged portfolio by leased lettable area will be due for renewal in any one year for the next 10 years”, said the REIT.

The Keppel Group, through Keppel DC Investment Holdings, and DC REIT Holdings will undertake to subscribe for the pro-rata entitlements under the preferential offering.

The proposed acquisition is subject to the approval of Keppel DC REIT’s unitholders that will be sought at an extraordinary general meeting, of which the date has yet to be announced.

Books closure date for the preferential offering will be at 5:00 p.m. on 25 October, and eligible unitholders can subscribe for their respective entitlements from 28 October to 7 November 2016.

The new units are expected to be listed on the Singapore Exchange on 15 November 2016.

Correspondingly Keppel DC REIT announced on the same day that it has achieved a DPU of 1.90 Singapore cents for its 3Q 2016, 13.8% higher from what was forecasted for the period during its initial public offering.

Units of Keppel DC REIT finished the trading day about 1.6% higher from its previous close on the Singapore Exchange to end at SGD1.23.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.